Client Advisory: Container Lines Halt Red Sea Shipping

What’s happening? 

Since November 19, there have been multiple hostile attacks and hijacking attempts occurring in the Southern Red Sea in an area called Bab el Mandeb, a strait between Yemen on the Arabian Peninsula, Djibouti, and Eritrea in the Horn of Africa. The attacks have been claimed by the Houthis in Yemen and are the fall out of the current conflict in Gaza. 

As a result of recent attacks by Houthi forces in the Red Sea region, Maersk, Hapag Lloyd and CMA recently asked their westbound fleet en route to the Suez Canal crossing to pause or halt outside of the Bab Al-Mandab Strait. The expectation is that more such decisions will be taken by other carriers.

A deeper look

All vessels that were due to transit Bab el Mandeb over the weekend have been asked to drift and not transit, and schedules are being updated. Since November 19, 55 ships have rerouted via the Cape of Good Hope. Which will lead to an increase in transit by over 8-10 days for Asia to Europe cargo and result in bunching of vessels.

The International Chamber of Shipping on Friday also called for states with influence in the region to work to stop the actions of the Houthis in attacking seafarers and merchant ships and de-escalate the serious threat to international trade.

The bottom line

Because of the decisions to divert vessels, we expect to see a large reduction in effective capacity that cannot make the Suez Transit without either going around the Cape of Good Hope (South Africa) or awaiting some form of military escort.

This will mean increased transit times and rate volatility for shipments moving from Asia to Europe, and Asia to the US East Coast.

WHAT’S NEXT?

This is a developing situation that we are monitoring closely so that we can provide timely updates to those impacted. At this time, your team, at SEKO, is working quickly to:

• Make arrangements for additional SPOT/Premium space on a First Come, First Serve basis
• Secure accurate forecasts with existing clients (including container type and counts) to plan for February and March demands as soon as possible

Rest assured, we are your logistics partner, ready and able to pivot quickly in the face of logistics challenges, whether climatic (as we’re seeing in the Panama Canal) or man-made (as we’re seeing now in the Red Sea). Should diversions persist or expand, our team is prepared to help create a solution that works for your business and your customers.

If you have questions, please reach out to your SEKO representative, or email us at hello@sekologistics.com.